Bitcoin Block Structure & Cryptography

Bitcoin Block Structure and Cryptographic Technology

Introduction

Bitcoin is often described as “digital gold,” but its true innovation lies deeper in its technical design.
At the core of Bitcoin’s security and decentralization are two pillars:

• The block structure, which organizes transaction history
• Cryptographic technologies, which ensure integrity, authenticity, and immutability

This article explains how Bitcoin blocks are structured and how cryptography enables a trustless monetary system.

What Is a Bitcoin Block?

A Bitcoin block is a container that groups verified transactions and links them to the existing blockchain.

Each block consists of two main parts:

• Block Header
• Transaction List

Blocks are created approximately every 10 minutes through mining.

Block Header Structure

The block header is fixed in size (80 bytes) and contains critical metadata.

Block Header Fields:

• Version
• Previous Block Hash
• Merkle Root
• Timestamp
• Difficulty Target (nBits)
• Nonce

These fields collectively determine the block hash, which uniquely identifies the block.

Previous Block Hash and Chain Immutability

Each block header contains the hash of the previous block’s header.

This creates a chain structure:

Block N hash → included in Block N+1 header

If any past block is modified, its hash changes, breaking all subsequent links.
This is the foundation of Bitcoin’s resistance to tampering.

Merkle Tree: Efficient Transaction Verification

Transactions inside a block are summarized using a Merkle Tree.

How It Works

• Each transaction is hashed
• Hashes are paired and hashed again
• The process repeats until a single hash remains: the Merkle Root

The Merkle Root is stored in the block header.

Why Merkle Trees Matter

• Efficient verification of individual transactions
• Enables SPV (Simplified Payment Verification) for lightweight wallets
• Reduces data required to prove inclusion of a transaction

Cryptographic Hash Functions in Bitcoin

Bitcoin relies heavily on the SHA-256 hash function.

Properties of Cryptographic Hash Functions

• Deterministic
• One-way (preimage resistant)
• Collision resistant
• Small input changes produce unpredictable outputs

Where Hashing Is Used

• Block hashes
• Transaction IDs (txid)
• Merkle Trees
• Proof of Work

Proof of Work and Block Hashing

Mining is the process of finding a block hash that satisfies the network’s difficulty target.

Miners repeatedly modify the nonce field and compute:

SHA256(SHA256(Block Header))

If the resulting hash is below the target value, the block is valid.

This process:

• Requires real-world computational cost
• Prevents spam and history rewriting
• Secures consensus without trusted parties

Digital Signatures and Transaction Authenticity

Bitcoin transactions are authorized using public-key cryptography.

Key Concepts

• Private Key: used to sign transactions
• Public Key: used to verify signatures
• Address: derived from the public key via hashing

Bitcoin uses ECDSA (Elliptic Curve Digital Signature Algorithm) on the secp256k1 curve.

What Signatures Guarantee

• Only the rightful owner can spend funds
• Transactions cannot be altered after signing
• Anyone can independently verify validity

Why Cryptography Replaces Trust

Traditional financial systems rely on institutions to:

• Maintain ledgers
• Prevent double spending
• Enforce ownership

Bitcoin replaces institutional trust with:

• Mathematical verification
• Open-source rules
• Cryptographic proofs

Nodes do not trust each other — they verify each other.

Security Implications of Block Structure

The combination of:

• Hash-linked blocks
• Merkle Trees
• Proof of Work
• Digital signatures

Creates a system where altering history requires controlling enormous computational resources.

This design makes Bitcoin:

• Tamper-resistant
• Censorship-resistant
• Globally verifiable

Conclusion

Bitcoin’s block structure and cryptographic design are not implementation details — they are the system’s core philosophy.

By embedding cryptography into data structure itself, Bitcoin achieves something unprecedented:

• A decentralized ledger
• Without central authority
• Secured by mathematics and incentives

Understanding these foundations is essential before exploring mining, consensus, and scaling — which we will cover in the next section.

H : {0,1}* → {0,1}^256

H2(x) = SHA256(SHA256(x))

BlockHash = H2(BlockHeader)

BlockHeader =
(version,
 previous_block_hash,
 merkle_root,
 timestamp,
 difficulty_target,
 nonce)

Hi = H2(Txi)
Hij = H2(Hi || Hj)
MerkleRoot = H2(...)

Required hashes ≈ O(log2 N)

y^2 = x^3 + 7 (mod p)

Private key: k ∈ [1, n-1]
Public key:  K = k * G

k' ∈ [1, n-1]
R = k' * G
r = xR mod n
s = (k')^(-1) * (z + r*k) mod n

w  = s^(-1) mod n
u1 = z * w mod n
u2 = r * w mod n
Q  = u1 * G + u2 * K

xQ mod n = r

Tx → H(Tx) → MerkleRoot → BlockHash
prev_block_hash_(i+1) ≠ BlockHash_i